Leadpile’s Blog

There has been alot of Leadpile posts about payday loans, and the various states implementing legislation on payday loans. California appears to be the next state to look at doing this. A recent article in Merced Sunstar points out that bill 377 is going through the legislature to attempt to regulate payday loans, however it does not have any rate cap incorporated into this bill. So, will this bill have enough ammunition for the legislature to see the need to pass it? Only time will tell.

Leadpile will keep an eye on this most recent payday loan news, and see what happens in the state of California (if anything at all).

Every time you check out at a retail store, do you recognize the statement, “would you like to save 10% on today’s purchase?”

You are getting asked this at all your favorite retails stores, because they are looking to have you open a new store credit card.  This is something that is enticing you to potentially save some money on that current purchase.  Who doesn’t want to save money, so many consumers choose to accept the offer.  However, do you know when you answer “yes”, that is giving that company to pull your credit and potentially affecting your credit score?

Any time anyone applies for new credit it affects your credit and it also affects your overall outstanding bills you are now going to have to pay.  Are these things that you think of when making that split second decision to say, “yes I would like to save 10% with that new credit card?”  According to bankrate.com, there are some pros and cons to retail credit cards.

Pros
• Promotions, discounts and other perks.
• Helps build credit history.

Cons
• High interest rates.
• Low credit limits.
• Lowers your credit score.
• Another spending temptation.

Once consumers have these sorts of credit cards and all other types of credit cards, it creates a potential financial hardship if there is a life changing event (ie- job loss, pay reduction, loss of spouse etc) that could put a consumer in a tough situation. Debt consolidation and debt settlement companies are great services to look into if you are buried in the debt. Leadpile Lead Exchange works a lot with these lead types, and I have to say in recent months there has been a lot more activity in those verticals. This tells me that too many people said “yes I would like to save 10% on this purchase”. Think before getting that next new credit card!

We all hear the opinions on both sides regarding payday loans. I came across this scenario that really points out the similarities of taking out a short term payday loan and renting a car. According to Ohioans For Financial Freedom commercial (youtube video),

Renting a car can cost about $29.00 per day. But imagine if the government required the rental company to quote an annualized cost of $10,585!

It’s just like the government saying that a $100 emergency loan costs $391 for the entire year, when it only costs $15 for two weeks. If you only need the loan for two weeks.—the yearly rate is absurd.

Leadpile Lead Exchange deals a lot with payday loans, the consumers wanting them and the lenders wanting to provide the loan for them. This scenario I found really makes it a little bit easier to understand the comparison amongst payday loans to something like a credit card or a rental car. There is bad in everything if it is abused. There is a need for short term loans sometimes, and a payday loan is a reasonable loan to take out for that short term need.

We all know the payday loan industry gets a lot of scrutiny for it’s “high interest” rates, however I found this article very interesting about the annual percentage rate (APR) on returned checks.
According to The Community Financial Services Association of America (CFSA), “the median interest rate on bounce protection loans to be in excess of twenty times that of payday loans.” When a consumer bounces a check, in essence it could be a lot more expensive for them to do that, than go get a short term payday loan. When a consumer bounces the check they pay a certain fee, and that fee is accumulated daily until the funds are sufficient. Unfortunately, this could sometimes cause a snowball affect, being that charge after charge could lead to more insufficient funds.
Payday loans might not be the only alternative, however a consumer needs to really look at the overall picture. They need to try and determine how they can prevent this sort of situation from happening again. Banks will make their money on fees, however there are certain circumstances that happen where you should look at alternatives that might cost you less in the long run.. like a payday loan, borrowing the money etc.
Leadpile Lead Exchange works with various lead types that deal with helping consumers be matched up with financial institutions to provide that service. Unfortunately, not all consumers reach out for help, and in turn get deeper and deeper in a “hole”. There are resources out there such as the payday loan that can be very helpful in trying times.